A Conversation With Wilbur L. Ross, Jr., Secretary, U.S. Dept. of Commerce | Part 2: U.S. Overview

Trade Policy and Tariffs

• The Trump administration delayed steel and aluminum tariffs on Canada, Mexico, and the EU for 30 days to allow time for further negotiations.
• Secretary Ross characterized the delay as a strategic move to address global steel/aluminum overcapacity threatening national security, rather than "picking winners and losers."
• Negotiations with the EU involve demands for reduced U.S. car tariffs and a smaller trade surplus; the EU reportedly resists "negotiating with a gun to our head."
• The administration views the WTO as "obsolete" due to its historical bias toward exporting countries and its inability to effectively enforce rules.
• Secretary Ross argued that trade deficits are not mathematically equivalent to surpluses, noting that while Chinese high savings rates stem from a lack of social safety nets, the surplus ultimately harms China's domestic economy.
• Regarding China, the administration dismissed a New York Times report claiming Beijing would oppose a $100 billion trade surplus reduction target, stating the administration has not announced such a target.
• The ZTE sanctions were justified by repeated violations of sanctions against North Korea and Iran, as well as the provision of misleading information during a previous $1 billion settlement.
• Economic security is explicitly linked to national security under the Section 232 legislation, justifying trade actions tied to defense concerns like those regarding North Korea.
• Secretary Ross rejected the notion that the administration would return to the Trans-Pacific Partnership (TPP), citing a lack of political appetite in Congress and support from both parties in 2016.
• NAFTA negotiations are currently in the "difficult issues" phase, with a timeline constrained by upcoming elections in Mexico (July), Canada (June), and the U.S. (November).
• Secretary Ross asserted that a potential trade war would not cause "Armageddon," citing that Brazil could not easily replace U.S. soybean exports to China without disrupting other markets like Japan.
• The administration observed "reshoring" acceleration, with 3,353 companies moving operations to the U.S. in 2017, a 52% increase over 2016.

The Goldilocks Economy and Macroeconomic Outlook

• Secretary Ross and panelists described the current U.S. economy as a "Goldilocks" environment, noting 106 consecutive months of expansion (the second-longest on record).
• Consumer confidence and spending are rising, with panelists attributing growth to deregulation, tax reform, and the psychology of improved job security rather than just tax cuts.
• Over 5 million American workers reportedly received increased benefits, bonuses, or retirement contributions following the 2017 tax bill.
• Governor Hickenlooper highlighted Colorado as the #1 U.S. economy, driven by a balanced mix of agriculture, aerospace, cybersecurity, and healthcare.
• Panelist Ken Hirsch warned of "canaries in a coal mine," citing rising corporate and consumer debt, lower productivity gains, and an aging business cycle as potential recession triggers.
• Governor Hickenlooper expressed concern that the tax cut borrows from future generations and that massive government spending expansions may become unsustainable.
• Steve Kruskos remained optimistic about M&A activity, driven by technology-induced portfolio transformation and cross-border deals, despite regulatory hurdles in antitrust.
• Ken Hirsch warned of a "technology Cold War," suggesting that post-WWII institutional frameworks are ill-equipped to handle borderless technology and national security risks in the current geopolitical climate.

Space and Energy Sector Developments

• The Commerce Department is positioning itself as the primary facilitator for the commercial space industry, citing the need to update 25-year-old remote sensing regulations to match technological advances.
• Secretary Ross highlighted the economic impact of reusable rockets (e.g., SpaceX's recovery of boosters), predicting that amortizing capital costs over 5-10 launches will drastically reduce space entry costs.
• The commercial space sector is projected to grow from $340 billion to $1 trillion, with 1,500 new companies formed last year and 70 countries participating.
• A strategic concept discussed involves using the Moon as a "gas station" for Mars missions, leveraging permanently dark craters containing ice to produce hydrogen and oxygen fuel.
• The oil and gas industry is now a critical component of U.S. manufacturing; excluding this sector would cut the post-2009 economic recovery rate by half.
• Governor Hickenlooper credited a unique public-private regulatory process in Colorado for successfully balancing environmental concerns with the shale oil/gas boom.
• The U.S. is now the world's second-largest oil producer (10.2 million barrels/day), reducing foreign dependence on the Middle East and freeing up foreign policy.

Agricultural and Regional Policy Specifics

• Tyson Foods CEO Tom Hayes expressed caution regarding trade uncertainty but confirmed the company is not yet seeing significant negative impacts in China, though they monitor earnings closely.
• Tyson Foods is utilizing tax savings to invest in automation and blockchain technology for supply chain efficiency, aiming to remain competitive while managing labor-intensive challenges.
• Governor Hickenlooper defended Colorado's marijuana legalization, noting that fears of a teenage consumption spike were unfounded and that the industry generates $200 million annually for law enforcement and black market reduction.
• Despite federal illegality, a regulatory framework in Colorado allows most legal marijuana businesses to operate through banking partnerships with local credit unions, avoiding a purely cash-based economy.
• Governor Hickenlooper advised other states to wait before legalizing marijuana unless citizens have voted for it, citing the need to observe unintended consequences over time.
• Steve Kruskos noted that outbound M&A activity from China to the U.S. has been depressed due to trade tensions, representing a lost opportunity for U.S. technology investment.